Intro: Do you feel like you were meant to have a kick-ass career as a hair stylist? Like you got into this industry to make big things happen?
Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.
Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit, just working in your business and start working on it, join us here, where we share real success stories from real stylists.
I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.
Britt Seva: What is up and welcome back to the Thriving Stylist Podcast. I’m your host Britt Seva, and I’m really excited to geek out today over different pricing options that exist in the industry today.
It’s so funny because when I joined the industry, everything was just a la carte. You want to highlight? You pay for a highlight. You want a haircut? You pay for a haircut. Now, fast forward and there’s so many different ways to price the same set of services. I’ve been getting a lot of questions lately about how to determine what pricing model is best for every stylist, and these questions are so good.
The thing of it is, I don’t think there is a one size fits all model that’s perfect for everybody, just like with anything else in this industry. So I’m excited this week to dive deep into what I think are the three main pricing systems available in our industry today. Then hopefully through this episode, you’ll be able to decide what is truly best for you.
The three main price point options that are available to stylists and beauty professionals today, in my opinion, are going to be service-based or a la carte, same difference. Hourly pricing is trending really big right now, and I want to talk about that. Then block-based, or session-based or all inclusive. To me, there’s a lot of different ways to describe the same thing.
You’ll hear me use terms like block-based pricing, session-based booking and all-inclusive booking. When I use those terms, I’m going to use them a little bit interchangeably. I’ll try and make it as clear as possible. But to me, we’re looking at service-based hourly and then block-based session, all-inclusive as our three main pricing models that we’re working with today’s beauty professionals.
If you don’t mind, as always, I try and talk about food as much as I can. I think that the easiest way to break down the true differences between each model is to talk about restaurants, because restaurants are something that all of us have experienced at some point in our life. You’ll be able to deeply understand the differences between each of these three if I break it down in that way.
When we look at service-based pricing or a la carte pricing, it’s like ordering a la carte from a menu. You’re like, okay, I’ll take the calamari appetizer, and then I’ll do a Caesar salad, and then I’d like to have the sea bass as my entree, and then I’ll take the chocolate cake for dessert. Please, and thank you. That’s ordering a la carte. Then at the end of the meal, you would pay for the order of the calamari, the salad, the sea bass, the chocolate cake, whatever you had to drink, and that’s how you’d be charged. You’re charged essentially per piece or per item.
That’s a really typical way to charge in our industry. If somebody wanted a haircut, a root touch up, a blow dry, and a conditioning treatment, they’d pay for each of those four things. That’s all a la carte or per service.
Then we get into hourly based pay, which for me–when I’m thinking about hourly based pay and how it would convert to a restaurant setting, to me it’s like an all you can eat buffet. I live in the San Francisco bay area and in recent years, probably in the last five years, a fairly upper class, all you can eat buffet type of restaurant has come into the community. We have a couple locations here. It’s called Fogo de Chao. You may have heard of it before, you may not have. I didn’t know it existed until just a couple of years back.
It’s essentially, I believe it’s classified as a Brazilian steakhouse, but they have everything there. Definitely lots of great cuts of beef. They’ve got seafood, they’ve got chicken and poultry. They have a huge salad bar, side dishes, desserts, everything. But essentially the model is all you can eat buffet. So it’s very high end. I’m not saying it’s like the Sizzler where my family took me when I was a kid, which, all due respect to the Sizzler. But this is like on a different level. This is a very high end, all you can eat buffet and the price point reflects that.
The way it’s set up is that you pay for your seating. You could say, well, you could choose to sit at that restaurant forever. Yeah, but I’ve worked in the restaurant industry, and if you’ve worked in–I worked in a high-end restaurant. I was in a five star restaurant at the Ritz Carlton in Half Moon Bay called Navio. It’s more of an elite dining experience.
When you’re eating in a place like that, a higher end restaurant, there’s a typical turnover of each table. You know going into the night how many times your tables will turn. There’s a science to it. So even though it seems like, well, nobody kicks me out. Nobody kicks you out, but there’s a science to how often the tables turn.
Eating it at a high end, all you can eat buffet, to me is very similar to an hourly-based pricing model where you sit down in the restaurant, you can essentially eat as much as you want to in the time that you’re there, you eat until you’re stuffed and can’t eat anymore. You’ve had your sufficiency or whatever, and then you leave and then somebody else comes in and takes your place.
It’s the same in the hourly based pricing structure in a salon. Somebody sits down and they can choose what they want on their plate or what they want on their hair. Somebody could say, I want a haircut today, I want a root touch up today, I want some highlights today and whatever is available in the time allocated could be done.
If somebody is booked for two hours and they want some massive color correction, well, that’s not on the menu. It won’t fit within that time. But within those two hours, essentially, whatever could get done could get done and the price is the same for those two hours, regardless of what gets put on the plate.
If somebody just chooses a pretty complex haircut and the styling takes another hour, that haircut and styling, if it’s a two-hour block, could be charged the same as somebody getting like a balayage because the time is the money. That, to me, is the best way to understand the hourly rate. Instead of by exactly what you get, it’s the amount of time allocated and you could have essentially anything you want within that time.
Okay, then we get into the block base or session-based or all inclusive pricing. It’s almost like this hybrid of both. It’s a bit of a crossover of service-based, a la carte, and all you can eat buffet. To me, it’s what I call the pre fixe menu.
So again, if you’ve ever worked in a restaurant that was higher end or dined in a place that has a pre fixe menu, what happens is you go in. The price is whatever it is. I’ve seen pre fixe menus where it’s $225. You don’t pick anything. It’s six courses and they are all pre-planned. Sometimes you’ll get a choice. It’ll be like, well, do you want a beet salad or a Caesar salad?
But often there’s no choice at all. It just is what it is. It’ll be an appetizer, a salad, a soup, an amuse-bouche, an entree, the section of sides, and then a dessert and that’ll be it. You don’t get to choose anything. You’re just down for the $225, you’re served what you’re going to serve. That can be a really fun way to eat.
The thing about a pre fixe menu is I’m a super particular eater, so I can’t do pre fixe because I’m weird about textures and tastes and all kinds of things. So I know if a restaurant is serving pre fixe, we won’t go there because I’m too particular about so many things that it’s not a good fit for me.
With that, the session-based, block-based, all inclusive based pricing is wonderful. Listen, there is a high end market who loves a pre fixe menu, so it works. But what I’m saying is it’s not for everyone. None of these pricing models are for everyone, and I want to get into how to know if you should be offering your guests the per item type of charging, the all you can eat buffet, or the pre-fixed menu.
Let’s start by doing good, bad, and ugly of each of them. We’ll start with the a la carte or the service-based pricing. This is the most standard. Some of the pros are that clients are really used to it. Like I said, when I joined the industry in 2007, this is just how we did it. There was no other way, and so it’s been around for a long time. People expect it. They know how to navigate it. When I say people, I mean clients. When I say people, I mean stylists and salon owners, too. It’s something we’re very comfortable with. But nothing good comes from comfort zones. So I think it’s exciting we’re looking at these other options, but this is certainly the most simplistic and that makes sense.
Another really great thing about a la carte or service based is that you’re sure to cover your expenses and be profitable so long as your prices are set properly. This is one of my favorite aha moments that always happens in Thrivers Society; people get in and we are launching a really new, exciting pricing system, which I’m so excited about.
But people get in and they’ll do the pricing system and structure. They’ll put everything into the calculator and it’ll spit out the numbers and stylists will be like, oh my gosh, I didn’t realize that my prices on paper sound great, but I’m actually not profitable with them.
If you’re a stylist where you’re like, man, I feel like I work really hard. I feel like my prices are fine, but then when I get my paycheck or when I pay all of my salon expenses or however you get paid, when I look at what I’m left with, it feels like nothing? It’s cause your profit margin’s too tiny.
Small profit margins exist for salon owners, booth renters, studio, suite owners, commission, stylists, everybody. To me, it doesn’t impress me much when you have a high service ticket if you have a low profit margin. That’s the rule of thumb in any business.
With a la carte pricing–with any pricing actually–you have to make sure you’re preserving that margin. Just having the top line service price is just the first step. It’s the margin where it really counts. The nice thing about a la carte or per service pricing is that if you are priced properly, you’re basically guaranteed to protect the margin with every service you do so you’ll never work too hard for the money, if that makes sense.
The other thing that I love about a la carte or per service is you have the flexibility to shift pricing based on what occurs to protect that margin. If somebody sits in your chair–has this happened to you? Somebody sits in your chair and you’re like, oh my goodness, it’s Rapunzel.
Rapunzel has four times the amount of hair of any guest I’ve ever seen before in my life. Not only is Rapunzel’s hair down to her waistline, it’s thick. It’s one of those ponytails that you need a double holder just to go around and make the pony. I understand that client would take more time. Totally get it, and I agree. But that client would also take more products.
That’s my concern with some of these other models is it’s not just about the time. We also have to cover cost of product too. They’re not always one in the same, and if you don’t cover that cost of product, you could be losing your margin. That makes me a bit nervous.
But with a la carte or per service, there’s always the opportunity to protect the margin. In Thrivers Society, we have these little bonuses add ons that we’ll add onto a ticket or out onto the way that we booked to ensure that our margin is protected and you lose that.
The other thing that I’m a really big fan of is what I call the margin for magic. This is the opportunity to add extra revenue to any guest that sits in your chair. I’m not a fan of sales gimmicks, so I don’t coach to that. I’m not like, hey, today’s March Madness, take a free treatment or whatever. I don’t like any of that kind of stuff.
But what I like is sometimes you see a guest and you’re like, friend, we need to do a deep conditioning treatment today. Is it a wonderful experience to your guest if the treatment is just included? My gosh, from the guest experience perspective, that is beautiful. I can’t argue with that. Wow. That’s wow-factor.
But from your profit margin perspective, I get nervous. I understand that you’re giving away these treatments and they’re included in the pricing and you’ve allocated some funds to make that happen, and that’s great. But you’ve essentially shrunk your margin for magic, and we’re going to get into that in just a second.
Okay, so what are the cons for a la carte and service-based pricing? One of the things that comes up a lot, and I remember this being in the salon too, is that clients felt like they were ordering at McDonald’s sometimes and that’s not true; where they’d say, well, I know that comes with fries, but is there any way that I could get an extra cheeseburger instead? And you’re like, no, you need the fries today.
When a guest comes in and gets highlights and they need to be toned, no matter what you did, the way it lifted was going to be raw. It wasn’t going to look finished, so they need a toner. However, some guests would be like, oh, the toner’s an extra $25? That’s okay. You’re like, no, no, it’s not okay. It’s not an optional service. This is the result you were looking for. The toner must happen. We are doing this today.
If they don’t agree, that can be a real pain point. We don’t want that. We don’t want our clients saying, well, I don’t want to pay for the toner so I’m not going to get it. That’s something that can come up with a la carte pricing.
Now, the great news is there’s verbiage and there’s ways around that. You don’t have to position the toner as an option at all when you’re doing a la carte pricing. To me, if it comes up and feels like an option to the client, your positioning was likely wrong from the start so we just need to shift the verbiage on that. That’s a quick correction to me, but it is an issue and something we need to talk about.
The other thing, and it’s a bigger thing, is that sometimes with per service pricing, we’re human beings and we forget to add on the little extras. Man, I meant to charge her for extra color or he got a shave today and I didn’t add it onto his ticket or whatever. We forget to add these things on because we’re human beings and that happens, and that stinks. That’s the worst feeling, and it lingers for two days where you’re like, ugh, I didn’t charge them right. I get it. So those are some of the cons to the per service pricing.
Then we have hourly pricing. Hourly pricing is a new-er, I would say–I think it’s existed for a long time, but it’s certainly picking up traction. Some of the reasons that I think hourly pricing is appealing is it’s really simple and easy. I mean, who doesn’t love simple? I certainly do. It’s tempting to be like, man, it’s just so easy. There’s no more–I know a lot of sales feel like they nickel and dime their clients. I hear that all the time when they do the per service pricing. I get it. We don’t want that kind of feeling.
With the hourly, there’s none of that. It is what it is. This is the all you can eat buffet method. There’s no, well, this is an add on, this is extra, what about this other thing… that goes away completely. Guests know without a doubt from the start what they’ll pay today without surprises.
You can list all of this pricing on your website. People can say, okay, I’m booked for two and a half hours. The price is going to be $250 or whatever. It’s very easy so there’s no, oh my goodness, I didn’t know it was going to be this expensive. It’s so cut and dry. That’s certainly a pro as well.
One of the things that I personally like about hourly pricing is it forces your haircut to go up automatically. Do you know that when we use good business sense, haircuts should always be more important than color? Do you know why? Because haircuts require us to use so much additional labor.
Would you rather have an entire day of root touch-ups or an entire day of haircuts? For most of you, root touch-ups are gonna win every time and the reason is it’s easier on your body. You can love haircuts, and I understand. But let’s just put it this way. If we asked your body, hey, would you rather do 8 haircuts today or apply 8 colors and do 8 shampoos? Your body would choose the colors because it’s so much less manual exertion.
Something to think about when you do the hourly, the cost of your cut goes up automatically because it’s about the value of your time, not the value of the service executed. That is very appealing to me because I like that you are always earning what your time is valued at, and I dig that a lot.
Then with hourly pricing as well, it’s about paying the stylist for their time rather than their process, and I agree with that wholeheartedly. That’s the way Thrivers Society pricing is set up as well. It’s not charging for what gets done, it’s charging for the executed value at the end. I do agree with that for sure.
Okay. Cons, and there are some cons and these are my hesitations to diving deep into, I love hourly. There’s some things about it that I’m just not sure are in alignment with my personal views of the industry. That’s not to say it’s bad by any means, but there are some sticking points for me where I’m like, I don’t know if this is right for everyone. None of these are right for everyone, but I want to get into some of the cons.
With hourly pricing, you could end up losing money if you aren’t careful because of the potential to lose that profit margin. I talked about profit margin a little bit earlier. Protecting your margin is the number one thing you do in your business.
I have a call with my financial advisor every 30 days, we hop on a call together. Do you know what the first number he goes over with me is? Margin. We don’t talk about how much money the business produced the month before. We don’t talk about expenses. We don’t talk about payroll. Margin is the first number, cause it’s the most important number.
Making $100,000 with a 5% profit margin is terrible, but making $20,000 with a 25% profit margin is great. You’re left with 5k at the end either way, but it’s a much healthier business model. So protecting that margin is important.
With hourly, if you don’t do it properly, you could lose your margin as soon as you start doing color corrections or guests with longer thicker hair, or–there’s a lot of ways that the overhead could bite you.
It’s funny. When I talk to people who aren’t in the industry, they’ll always be like, well, the good thing about the beauty industry is there’s low overhead. Always I get a knot in my throat where I’m like, oh my gosh, the overhead in our industry is so tremendously high. It’s such a foolish thing to say, cause it’s not true. If you’re not careful, that overhead could really get ya and eat up your margin.
Another con: some clients don’t understand and will feel like they’re paying too much for a simple service. Not all guests will feel that way. A lot of guests will be like, this is so much easier. It depends on the kind of clientele you serve. This is why I say there’s no one perfect fit for everybody. It’s going to depend on your target market, your desired services offered in your service menu, truly is what it’s going to come down to.
But if you have a client that’s a cut blowout or just a root touch up every six or eight weeks, they’re likely going to have to start paying a little bit more because the way you have to set your hourly pricing is that it’s covering your butt no matter what is being done. Because of that, there are some services that are naturally going to have to increase in price.
You risk losing a bit of your competitive edge because why would I choose to see you and pay more if I can get an equal experience elsewhere, but save 30%? So there’s that, but if you’re just focusing on a higher end service ticket experience, it may not be an option at all. It’s just something to think about. Your clients who want something more simple may stray.
But this is my biggest concern and the one that really holds me back is, you essentially create an income cap for yourself. I’m not a fan of income caps. I hate glass ceilings. There’s the argument of no, you’d never create an income cap for yourself because you can raise your prices. Sure, but you can raise your prices in any sort of model and the difference between the hourly model is you can’t raise your income potential on the fly. You can raise your income potential with a structural change called the price increase, but on the day to day, you can’t.
If your hourly rate is $100 an hour and you work eight hour days, you essentially can’t make more than $800 a day unless you sell retail. Because if everything is truly all inclusive in that hourly rate, well then $800 is your maximum income potential. You’ll never have that killer $1,700 a day out of nowhere that you get to celebrate with a glass of champagne or whatever you cheers to.
That to me is concerning. I don’t love that. Then if you say, well, okay, so it’s hourly, but then you can add on things like treatments and you can add on things like, whatever. Well then it’s not hourly. Then you’re back to a la carte or you’re into block-based session, which we’re going to get into in a second. But that daily income cap, where the only way to raise it is raise your prices… I’m not sold on that aspect of it completely. It’s just something to keep in mind.
Then we have block-based session, all-inclusive. Again, I said I’m going to use those terms interchangeably and I still will. Things I like about it are the same things I like about the hourly, simple and easy to use for the stylist. Guests know without a doubt from the start, what they’ll pay for today without any surprises, the haircut price goes up automatically. I’m a huge fan of that.
The other thing I like about session-based, block-based, and all-inclusive is it’s truly about paying for a result. It’s not about time. It’s not about what services get done. It’s, this is what you look like today. This is what you want to look like in three hours. This is the cost to make that transformation happen.
I do think there’s crossover of that with hourly and with per service, for sure, but in the block- based or the session-based or all inclusive, it’s just so crystal clear that that’s what you’re doing because of the way it’s structured.
The cons are, this only works if you’ve refined your target market and are working with a fairly limited service menu. I call it block-based booking.
There’s a lesson in Thrivers Society where I talk about block-based booking and how to set it up. You can really only have three to five blocks. It’s based on time and within that time, you could do a certain amount of services or options that would fit within those blocks. It’s like putting pieces of a puzzle together, and there’s only so much that can get done within that time.
If you’re somebody who still does all different kinds of haircuts, styling on a regular basis, root touch-ups, color corrections, chemical relaxers, you do balayage. I do extensions. I also do brides. If you do all of these other things, it will be incredibly difficult to try and fit that into session-based pricing, inclusive pricing, block-based pricing just because you have too much on your menu.
You’re a restaurant where you can’t do the pre fixe menu. There’s too many things you want to serve and that’s okay. It just doesn’t fit within this schematic, so we have to do something different. Something to think about there.
Next, you could end up losing money if you’re not set up properly and you don’t protect the margin. That’s something to think about too. Then you could actually potentially also create an income cap for yourself. It’s not as strong as the income cap you’d create if you went full hourly, but the potential is still there depending on how you set up those blocks or sessions or all inclusive, whatever.
You just have to make sure, am I actually creating a glass ceiling when I do this? Am I exchanging simplicity for income potential, which is one of my greatest fears in business. I’m down for a simplified business too, but not if it’s going to cost me to lose my potential, my scalability, all of my growth potential. I don’t want to do that. I don’t want to lose my traction just to get some simplicity. You just have to make sure that you’re looking at this holistically and literally run the numbers and crunch and see what’s gonna work best for you.
When you’re saying, okay, got it. Kind of understand which of these pricing options is best for me. If you’re working to build your base clientele, or if you offer a wide variety of services, a la carte is going to be the number one way to go.
If you don’t do a lot of color corrections, complex color services, extensions, things like that. If you don’t have a more extensive service menu, hourly I think is great. I like that you are getting the value of your time. I like that when you leave to head into work every day, if you have a full day, you know how much you’re going to make. That peace of mind factor is really appealing. For some of you, if the business you run is fairly simple, this could be a really big landslide, victory. It’s just important to know what you’re walking into.
Then when we look at block-based or all-inclusive or session-based pricing, that’s going to be great for those that I consider to be scaling. Those with an established base, those that are seeing 5 to 15 new guests requests a month, and they have a limited service menu, that could be really killer for you.
Again, just watch the margin, watch the ability to increase your income. But I think there’s some potential there. But if you are a sinking, struggling, or sacrificed stylist for me, I would coach you to stay a la carte until you can shift to another level.
I’d love to know what questions you have about pricing, about anything in general. So do me a favor: take a screenshot of you listening to this episode, share it to your Instagram stories, tag me in, and then leave me a question and you might just get featured on an upcoming episode. You guys, so much love, happy business building, and I’ll see you on the next one.
